Contractor NRW Holdings has reported a solid increase in half-year profit but signalled a slowdown in its business, particularly its contract mining division, in the second half of the year.
The slowdown was evidenced today by news that its mining services contract with the Middlemount Coal joint venture in Queensland will shift to a ‘dry hire’ contract.
The tougher conditions facing NRW were also evidenced by a sharp reduction in its workforce numbers, from 4,535 in September last year to 3,100 at the end of January.
Most of the reduction was from labour hire and subcontractors rather than direct employees.
The company today reported a 33 per cent increase in revenue to $810 million for the half-year to December 31.
Most of the revenue growth was from its civil and drill & blast divisions, whereas the mining division achieved just 11 per cent growth.
The higher revenue translated to a 7 per cent lift in net profit to $48.6 million.
The company said it was “pleased to report a solid result notwithstanding the challenging conditions in the second quarter of the financial year”.
That was when some of its major clients announced cutbacks to their growth plans.
The company said it expected full-year revenue of $1.4 to $1.5 billion “pending timely award and commencement of contracts”.
This implies second-half revenue will be $600 to $700 million.
The main contributor to the slowdown will the mining division, with the company saying it expected reduced full-year revenue and margin due to contract changes already announced.
NRW said it planned to continue focusing on “internal efficiencies, rationalising input costs and realising synergies across the group”.
The company’s share price was little changed today at $1.89. It had slumped as low as $1.30 in December after trading above $4 in March last year.
